Air Force says R&D funding may face cuts with sequestration

WASHINGTON (Reuters) - The U.S. Air Force may have to cut funding for research and development unless Congress reverses a law requiring across the board spending cuts, the No. 2 Air Force acquisition official said.

Lieutenant General Charles Davis, military deputy to the Air Force’s top weapons buyer, said Pentagon leaders were determined to protect funding in new technologies, but the Air Force would have to cut funding in that area somewhat to ensure the readiness of its forces if sequestration stayed in effect.

“You’ve got to realize that science and technology ... will also have to pay its share as we move forward with sequestrations that range from 13 percent to 20 percent,” Davis told an investor conference hosted by Credit Suisse in New York. His remarks were webcast.

The Pentagon is bracing for additional mandatory cuts in military spending in fiscal 2014, which began October 1, although lawmakers are working on a budget deal that could ease the extent of those cuts.

If Congress fails to reverse sequestration, the Pentagon will have to cut planned spending by $500 billion over the decade that began in fiscal 2013, on top of $487 billion in reductions that were already planned for the same time.

Industry executives and academics this week urged Congress to reverse the cuts, which have already triggered thousands of layoffs. They also warned that scaling back government funding in R&D projects could undercut U.S. competitiveness in the future.

Davis said the Air Force was being forced to reduce procurement and development funding because of lawmakers’ refusal to allow the closure of excess military facilities and the time it takes for force reductions to affect the budget.

He said the continuing uncertainty about budget levels for fiscal 2014 and future years was a huge challenge for Air Force program managers, and for now they were being told to plan for a continuation of budget levels seen in fiscal 2013, minus about 2 percent to 3 percent.

Davis told the conference he hoped Congress would pass a continuing resolution to keep funding the government, since such a measure would at least allow the services to shift funding to priority areas. However such measures limit the service’s ability to start any new programs, he said.

Davis said any cuts could force the Air Force to reduce its planned orders of F-35 fighter jets built by Lockheed Martin Corp. He said he hoped to avoid cutting spending on the program’s development since that would delay work on the final software version needed to give the jet its full combat capability.

Even as it grapples with daunting budget challenges, the Air Force is also continuing to try to improve its acquisition process, Davis said, citing concerns about the current sluggish process of negotiating contracts with industry.

“We’re losing money ... every time we drag these things out,” he said, citing the Air Force’s current discussions with Lockheed about a multiyear deal for more C-130J cargo planes.

He said government and industry needed to communicate more openly to arrive at a more common picture of fair profit, but there were also additional savings possible in overhead on both the government and industry side.

He said the oversight process had also grown unwieldy, because “everybody’s second-guessing everything that’s out there right now.”